Economy of Ethiopia

During Haile Selassie I's time as ruler from 1930 to 1974, Ethiopia's economy had a little bit of
free trade. Cash crops like coffee were grown and sold to other countries. Factories were also
built to make products like clothes and shoes instead of having to buy them from other countries.
After World War II, tourism, banking, insurance, and transport started to become more important
for the country's economy. The government took control of everything people used to make
things, like land, homes, farms, and factories. The small farmers in Ethiopia were unsure about
their land rights. This made them hesitant to grow extra food to sell. Even though the
government still owns the land, life in rural Ethiopia has gotten a little better because the
government is focusing more on developing these areas. However, people are still arguing about
who owns the land, which has slowed down the growth of farming businesses.

Lalibela, Ethiopia: Amhara market

Selling cotton at the Amhara market in Lalibela, Ethiopia.

Even though Ethiopia has made some improvements in its economy since the 1990s, it is still
very poor compared to other countries in Africa and the world. In 2001, Ethiopia got help with
their debt from the IMF and World Bank. Then in 2005, Ethiopia got rid of all their loans from
the IMF, World Bank, and African Development Bank.
Agriculture, forestry, and fishing
Ethiopia has very good agricultural land. Soil erosion, too many animals eating all the plants, and
cutting down too many trees have really hurt the plateaus. But almost half of the land that could
be used for farming is still okay. Most of the reserve land is in areas with good weather for
farming. Furthermore, Ethiopia has a lot of cows and other animals, making it one of the
wealthiest countries in Africa. By taking better care of the land where animals graze and
improving how we breed them, we can produce enough livestock to sell both in our own country
and to other countries.

Farming makes up almost half of Ethiopia's total income. There are three different ways that
people work on farms. The most important sector is the small farms that produce most of the
main grains like teff, wheat, barley, oats, sorghum, corn, and millet, as well as pulses like
chickpeas, peas, beans, and lentils. Farm plots are tiny, usually between 3 to 6 acres in size. Cash
cropping is the second type of farming. Items for sale are coffee, oilseeds, beeswax, sugarcane,
and khat (qat; Catha edulis), which is a mild narcotic. Coffee originally comes from Ethiopia and
is the most important thing they sell to other countries. Raising animals for food is the third most
important type of farming in the outer areas of Ethiopia. A family can keep a lot of animals and
move with them to find food and water each season.

People fish in the rivers and lakes in the country using traditional methods. Local fish mostly
comes from small fishermen who don't have the ability to produce fish for export. Even though
the fishing industry is not very big, the amount of fish caught more than doubled in the 1990s.
The country doesn't do a lot of business in forestry.

Resources and power

Mining
Minerals don't have a big impact on Ethiopia's economy. Only gold and tantalum are important.
Gold is found in Kibre Mengist in the southern part of the country, platinum is found in Yubdo
in the western part, and tantalum is found in the south-central part of the country. Gemstones,
niobium, and soda ash are found and taken from the earth. There is also a chance to find and use
other minerals like oil and natural gas. Also valuable are salt from the Denakil Plain and rocks
used to build things like marble. Compared to what it could do, this sector doesn't contribute
much to the country's economy (less than 1 percent of GDP).
Gold:

Gold mining is one of the most significant economic activities in Ethiopia's mining sector,
contributing substantially to the country's economy. Here's an overview of gold mining in
Ethiopia:

Historical Context: Ethiopia has a long history of gold mining that dates back thousands of years.
Traditional gold mining practices have been carried out by local communities, especially in the
southern and western parts of the country.

Major Gold Deposits:

Lega Dembi: The Lega Dembi mine, located in the Oromia region, is the largest gold mine in
Ethiopia. It has been operated by MIDROC Gold, a subsidiary of the MIDROC Ethiopia
Technology Group, which is owned by Ethiopian-born Saudi billionaire Mohammed Hussein Al
Amoudi. The mine has produced significant quantities of gold and has been a major contributor
to Ethiopia's export revenues.

Sakaro: The Sakaro mine, also located in the Oromia region, is another important gold mine
operated by MIDROC Gold. It is situated near the Lega Dembi mine and shares similar
geological characteristics.

Artisanal and Small-Scale Mining (ASM): In addition to industrial mining operations, artisanal
and small-scale gold mining is widespread in Ethiopia. Thousands of people are involved in
ASM activities, particularly in the regions of Benishangul-Gumuz, Southern Nations,
Nationalities, and Peoples' Region (SNNPR), and Gambella. ASM plays a crucial role in local
economies, providing livelihoods for many families, although it often lacks regulation and can be
associated with environmental and safety concerns.

Exploration and Investment: Ethiopia has attracted interest from international mining companies
due to its gold potential. The Ethiopian government has granted exploration licenses to various
companies, aiming to increase the discovery and development of gold deposits. The
government's policy framework encourages foreign investment in the mining sector to harness
the country's mineral resources.

Challenges:
Regulatory and Legal Framework: While the Ethiopian government has made efforts to improve
the regulatory environment, challenges remain, including bureaucratic hurdles, regulatory
inconsistencies, and the need for clearer mining laws.

Environmental Concerns: Gold mining, particularly ASM, can lead to environmental

degradation, including deforestation, soil erosion, and water contamination. Addressing these
environmental issues is crucial for sustainable mining practices.

Social and Economic Issues: Ensuring that local communities benefit from gold mining activities
is a challenge. Issues such as fair compensation, community development, and conflict resolution
need to be addressed.

Economic Impact: Gold mining contributes significantly to Ethiopia's economy through export
revenues, job creation, and infrastructure development. It is one of the key sectors targeted by the
government for economic diversification and development.

Overall, gold mining in Ethiopia holds significant potential for economic growth and
development. By addressing regulatory, environmental, and social challenges, Ethiopia can
further harness its gold resources to benefit the country and its people.

Tantalum:

Tantalum mining is an important part of Ethiopia's mining sector, with the country being one of
the world's major producers of this valuable mineral. Here's an overview of tantalum mining in
Ethiopia:

Tantalum Deposits:

The primary source of tantalum in Ethiopia is the Kenticha mine, located in the Oromia region.
The Kenticha pegmatite deposit contains substantial amounts of tantalum-bearing minerals,
making it one of the largest tantalum resources in the world.

In addition to the Kenticha mine, there are other areas in Ethiopia with potential tantalum
deposits, though these are less explored and developed.
Kenticha Mine: The Kenticha mine has been operated by the Ethiopian Minerals Development
Share Company (EMDSC). The mine has historically been the main producer of tantalum in
Ethiopia, contributing significantly to the country's mineral exports.

The tantalum extracted from the Kenticha mine is known for its high purity and quality, making
it highly sought after in international markets.

Uses of Tantalum:

Tantalum is a critical metal used in various high-tech applications. It is primarily used in the
electronics industry for manufacturing capacitors and high-power resistors. Tantalum is also used
in the aerospace industry, medical implants, and other specialized equipment due to its excellent
corrosion resistance and high melting point.

Economic Impact:

Tantalum mining contributes to Ethiopia's economy by generating export revenues and creating
employment opportunities. The sector supports local economies, particularly in the Oromia
region where the Kenticha mine is located.

Challenges:

Regulatory and Operational Issues: The tantalum mining sector in Ethiopia faces regulatory
challenges, including bureaucratic hurdles and the need for clearer and more consistent mining
policies. Operational challenges such as outdated infrastructure and equipment also affect the
efficiency and productivity of mining activities.

Environmental Concerns: Like other mining activities, tantalum mining can have environmental
impacts, including deforestation, soil erosion, and water pollution. Effective environmental
management and rehabilitation plans are essential to mitigate these impacts.

Market Volatility: The global market for tantalum is subject to price volatility, which can affect
the economic viability of mining operations. Ensuring stable and fair pricing mechanisms is
important for the sustainability of the tantalum mining sector.

Future Prospects:
The Ethiopian government has recognized the potential of the tantalum mining sector and is
working to attract more foreign investment and expertise to further develop this industry. Efforts
to modernize mining operations, improve regulatory frameworks, and enhance environmental
management are ongoing.

There is also potential for exploration and development of other tantalum deposits in the country,
which could further boost Ethiopia's position as a leading tantalum producer.

Overall, tantalum mining is a significant industry in Ethiopia with considerable potential for
growth and development. By addressing existing challenges and leveraging its rich tantalum
resources, Ethiopia can enhance the economic benefits derived from this sector.

Potash: The Danakil Depression in the Afar region is home to significant potash deposits.
Potash is used primarily as an agricultural fertilizer. The region's potash resources have attracted
interest from international mining companies, although the challenging environment and
logistical issues have slowed development.

Opal: Ethiopia is known for its high-quality opals, particularly from the Welo and Shewa
regions. Ethiopian opals have gained international recognition for their vibrant colors and
patterns, making them highly sought after in the gemstone market.